Interview with Edward Carr, Deputy Editor of The Economist

February 8, 2018

We are extremely proud to present an exclusive Assumptions interview with none other than Edward Carr, the Deputy Editor responsible for The Economist!

After starting in The Economist as a science correspondent in 1987, he covered various topics ranging from electronics to trade to energy to the environment. In 2000, he left for the Financial Times, where he ended up as a News Editor. Returning to The Economist in 2005, he was first Business Affairs Editor, charged with the coverage of business, finance and science before moving on to become the Foreign Editor from 2009 to 2015. He is married with four children.

Assumptions interviewed him to find his thoughts on current issues in economics including Brexit, Blockchain and the Davos World Economic Forum.

Q: What are your thoughts on the Davos conference? What can be inferred from Trump’s attendance, the first sitting president in 20 years?

A: Like it or loathe it, Davos is an extraordinary phenomenon. It is an achievement to gather so many people in one place from the worlds of business, finance, politics and—don’t forget—academia and charities. It’s good for people to talk and share ideas. People who are obsessively focused on their own organisation benefit from looking up once in a while to contemplate the world instead.

The danger, as we all know, is that leaders fall victim to group-think and then they assume they are experiencing a wide range of views from around the world when really they are hearing the same few self-reinforcing messages echoing around the conference halls and corridors of a small, isolated Swiss town.

This year saw the visit of Donald Trump, the first sitting president since Bill Clinton—surely the embodiment of Davos Man. Mr Trump who is in contrast with Mr Clinton, a nativist, wanted to send the signal that America is strong again and engaged with the world. His speech bore the stamp of Gary Cohn, Mr Trump’s chief economic advisor and one of the globalists detested by Steve Bannon, the sacked White House chief strategist. The crowd lapped it up.

It is remarkable how Mr Trump has set expectations so low that merely reading a series of innocuous phrases from a teleprompter is greeted as statesmanship. However, my impression is that, for Mr Trump, words are cheap. This year could see a showdown with China over trade or a war with North Korea, both ruptures in the international fabric. Don’t just listen to what Mr Trump says: watch what he does.

Q: Are cryptocurrencies and Blockchain a threat or an opportunity for our current economic system?

A: Cryptocurrencies are a menace. Joe Kennedy, the father of JFK, famously sold out of the stock market just before the Wall Street crash because he had been given a share tip by a shoeshineboy. Popular excitement about Bitcoin and Litecoin and the rest is a classic case of what Kennedy was talking about. Cryptocurrencies are supposed to be stores of value that, unlike fiat money, cannot be manipulated by governments. However, after a spectacular run up, the 21st-century shoeshine boys have been piling in.

In fact, cryptocurrencies make for poor currencies. They are hard to price, because they have no yield. The value of a Bitcoin increased 3.5 times between November 1st last year and December 17th, when it hit almost $20,000, before tumbling back under $7,000 at the start of February. Because they are so volatile, cryptocurrencies are a poor store of value. Because they cannot instantaneously be traded—especially, one suspects, during a market meltdown, they are not a good medium of exchange. And those two characteristics make them a poor unit of account.

In truth cryptocurrencies are a huge speculative punt. Perhaps investors will decide to incorporate a small amount of them in the standard portfolio. Or perhaps the underlying technology, a decentralised register known as the Blockchain, will become ubiquitous and so owning a fraction of a bitcoin will become a passport to online services. Either of those plays might payoff. But it is a risk and not for the fainthearted.

Q: Are there actually any significant opportunities for the U.K. through Brexit?

A: The Economist has taken a consistent line against Brexit. We think that being out of the single market and the customs union with the rest of the European Union will make Britons poorer. We think that going it alone outside the EU will make Britain less influential in the world—both because it will hold less sway and because non-EU countries value Britain as a voice within Europe. There was plenty to dislike about the EU; there will be even more to dislike about being outside it.

Brexiteers object to our position, arguing that three big gains are to be had outside the EU. One is that Britain can choose to deregulate its economy. A second is that it can strike its own trade deals with other countries, where most of global growth will come. The third is that Britain can choose who to welcome as immigrants—because it will no longer have to open its doors to all-comers from within the EU.

In my view those gains will be impossible to secure politically. Even if we could secure them, they would be too small to offset the losses from leaving the EU.

They will be hard to secure because the Brexit camp is a coalition. One part of it consists of free-traders, who would like to strike trade deals with the rest of the world, deregulate industry and welcome lots of talented, energetic economic migrants from around the world. The other part does not want to cut farm subsidies, abolish worker protection and health and safety regulation or remove trade protection and open up immigration. Singapore on Thames is not on offer because it does not have political support.

Even if it were, Britain would struggle to realise the gains that Brexiteers set out. It would have to grab the attention of third countries for whom it is not a priority—including those, like Japan, that have recently signed deals with the EU. Trade theory suggests that distance matters. Britain would be harming its trade with the markets that are most important to it—in the European Union—in order to do deals in markets that are remote, such as China and India. Britain is already more deregulated than the rest of the EU. If we use Brexit to deregulate further, we will hinder access to EU markets.

Q: What are the largest sources of uncertainty at the moment?

A: There is a temptation to see the time you live in as especially uncertain—because you are not aware of all things in earlier times that might possibly have gone wrong, about which people worried, but which never came to pass. In our own day, by contrast, we are acutely aware of all the pitfalls.

So let me fall straight into this trap. I have been a reporter for 30 years—on The Economist and the Financial Times. Today, with the possible exception of the dark days of the Financial Crisis in 2008, I see two sources of uncertainty that dwarf anything else I have experienced.

One is technology. Artificial intelligence will automate a large number of white-collar jobs such as actuaries and low-level lawyers, to say nothing of the threat to factory jobs and, eventually, drivers. At the same time the development path taken by China, South Korea, Taiwan and Thailand may no longer be open to countries like India, Kenya and Egypt. Past experience suggests that the wealth created by automation eventually leads to new sources of demand. But it can take decades. And in that time a lot of harm can befall societies, economies—and political systems like democracy.

The other is geopolitics. China is rising. A challenge to America in Asia is looking more likely by the day. To reflect this, ­The Economist recently ran a cover story on the growing likelihood of a great-power war. Weapons technology is making that contest more likely, because it is destabilising the balance of power. To me, the West’s accommodation of China within today’s global system will be the hardest of all the tasks facing this generation and the next.

Q: And finally, why should students think of a career in journalism?

Because journalism is endlessly fascinating and enjoyable. In principle, journalists are paid to study the world around them, to ask difficult questions and to prick the self-importance and hubris of people in power.

I know that the press doesn’t always live up to that ideal and that the industry can be self-important, shoddy and bullying.

And yet we live at an unusually uncertain time. That means the job is as enthralling and, I’d argue, as important as it has ever been.